Kate Spade & Co

On July 25, Michael Kors (KORS) announced that it has entered into a definitive agreement to acquire Jimmy Choo (CHOO) for $1.2 billion. Let’s look at what Michael Kors could gain from the acquisition.

Coach’s one-year forward earnings multiple surged to 20.7x versus a three-year average of 18.3x.

Of the analysts that cover Coach (COH), 78% recommend a “buy” on the stock, 25% recommend holding it, and 3% suggest selling it.

Coach pulled out of 250 department stores in the US during its last reported quarter, reducing the department store count by ~25% in 2017.

Coach (COH), one of America’s leading handbag designers and sellers, has risen 35% year-to-date. Coach recently announced the acquisition of rival Kate Spade (KATE) for $2.4 billion.

Michael Kors (KORS) has a strong cash flow position. The company ended fiscal 4Q17 with cash and cash equivalents of $228 million and net debt of -$95 million.

For fiscal 1Q18, Michael Kors’ (KORS) management is looking for EPS of $0.60–$0.64 on total sales in the range of $910 million–$930 million.

Michael Kors (KORS) reported an 11.2% year-over-year decline in its fiscal 4Q17 sales to $1.2 billion, beating Wall Street by ~$10 million. For fiscal 2017, KORS’ total sales fell 4.6% to ~$4.5 billion.

Michael Kors (KORS) reported fiscal 4Q17 EPS of $0.73, $0.03 higher than analyst estimates. KORS’ revenues fell 11.7% year-over-year to ~$1.1 billion, beating the consensus by $10.0 million.

Coach (COH), America’s leading luxury handbag and accessories maker, is buying Kate Spade (KATE) for a total transaction value of $2.4 billion.

Coach’s (COH) stock price rose 11.4% to $43.15 after it reported its results on May 2. The company is currently sitting on a YTD profit of 23%.

Coach (COH) reported a 5% YoY rise in its EPS for fiscal 3Q17, registering $0.46 per share.

The Coach brand’s North America sales, which accounted for 48% of the company’s top line, fell 5% YoY to $474 million.

For fiscal 3Q17, Coach reported earnings of $0.46 per share, beating the Wall Street analyst average estimates by $0.02.

Kate Spade’s (KATE) share price tanked 14.6% on Tuesday, April 4, as Reuters reported Monday evening that the handbag manufacturer had sought more time from Coach (COH) to consider its buyout offer.

VF Corporation’s (VFC) top line from continuing operations remained almost flat during fiscal 4Q16. Its total revenues stood at ~$3.3 billion, missing Wall Street estimates by $120 million.

VF Corporation’s D2C revenues rose 11% YoY, gaining strength from a mid-teen surge in the Outdoor & Action Sports and a low double-digit rise in Jeanswear.

KATE’s strict cost-control measures resulted in a 390-basis-point fall in its selling, general, and administrative rate, which fell to 39.1% of its sales in 4Q16 from 43.0% in 4Q15.

Kate Spade New York (KATE) reported a 10% rise in its 4Q16 sales to $471 million. Its 4Q16 comps stood at 9.3%, compared to 3Q16’s 7% and 2Q16’s 4% comps growth.

Kate Spade New York’s stock price made big strides yesterday after the company confirmed that it was reviewing strategic alternatives while reporting its 4Q16 results.

New York–based Kate Spade (KATE) reported its 4Q16 results on February 16, 2017. The company’s earnings per share stood at $0.41.

RL is currently trading 48% below its 52-week-high price and has fallen 15% YTD.

On January 25, 2017, Telsey downgraded Kate Spade’s rating to “market perform” from “outperform.” It reported fiscal 3Q16 net sales of $316.5 million.

On January 25, 2017, CLSA downgraded Coach’s rating to “outperform” from “buy.” Atlantic Equities downgraded Coach’s rating to “neutral” from “overweight.”

Kate Spade (KATE) reported fiscal 3Q16 net sales of $316.5 million—a rise of 14.1% compared to net sales of $277.3 million in fiscal 3Q15.

Nike (NKE) has a market cap of $86.7 billion. It fell 0.64% to close at $52.93 per share on January 19, 2017.

Kate Spade (KATE) rose more than 23.0% on December 28, 2016, after the report that the company is planning to sell its businesses with the help of investment banker.

On November 23, 2016, Wolfe Research downgraded Kate Spade & Company’s rating to “peer perform” from “outperform.”

Autoliv (ALV) has a market cap of $8.9 billion. It fell 1.1% and closed at $100.65 per share on November 23, 2016.

Fossil Group (FOSL) has a market cap of $1.7 billion. It rose 2.7% to close at $35.24 per share on November 21, 2016.

Fossil Group (FOSL) has a market cap of $1.6 billion. It rose 8.4% to close at $35.70 per share on November 16, 2016.

Fossil Group (FOSL) has a market cap of $1.3 billion. It rose 3.5% to close at $25.58 per share on November 4, 2016.

Kate Spade has seen YTD losses of 18%. The stock price plunged 10.2% after it warned about further margin contraction during its 3Q16 earnings call.

Kate Spade (KATE) reported a 15% rise in sales in 3Q16, with total sales reaching $316.5 million.

Kate Spade’s top line and bottom line beat Wall Street estimates, with revenue rising 15% YoY to $316 billion—nearly $5.5 million more than expectations.

Confident about achieving fiscal 2017 guidance After a healthy first quarter, Coach’s (COH) management is expecting strong results for fiscal 2017. The company reiterated its fiscal 2017 guidance of a low-to-mid-single digit top-line increase and an 18.5% to 19% expansion of its operating margin. “We achieved growth across key financials, including sales, gross profit and […]

Coach’s stock has gained 12% year-to-date Coach (COH) has done reasonably well in the stock market this year. As of November 2, 2016, the company was sitting on a YTD (year-to-date) profit of 8.4%. It has outperformed the S&P 500 Apparel and Accessories index, which had fallen 5.5% YTD. Coach, along with six other apparel and accessory companies, […]

Coach’s margins and sales improve Coach (COH), one of the most established players in the US affordable luxury segment, reported results for 1Q17 on November 1, 2016. As discussed in the previous two sections, the company’s sales improved 1% on strong international business and positive sales comps in North America. The company also reported an […]

Coach (COH) reported its results for the first quarter of 2017 before the market opened on November 1, 2016. Although the company reported earnings per share in line with Wall Street analysts’ estimates, it missed revenue estimates.

Wall Street has a bullish outlook on Kate Spade. The company has received 76% “buy” and 23% “hold” recommendations from analysts.

As a result of its second quarter headwinds, Kate Spade (KATE) lowered its full fiscal 2016 outlook.

Kate Spade’s (KATE) 2Q16 performance was characterized by a disconcerting slowdown in sales comps and a contraction in margins.

Kate Spade (KATE) is set to report its quarterly earnings on Wednesday, November 2, 2016, before the markets open.

Kate Spade (KATE) reported weaker-than-expected 2Q16 results on August 3, 2016, recording EPS of $0.11, as compared to the Wall Street estimate of $0.14.

New York-based Kate Spade (KATE) was upgraded by Wells Fargo on September 12, 2016, to an “outperform” from a “market perform” rating.

Kate Spade (KATE) has a market cap of $2.5 billion. It rose 0.82% to close at $18.53 per share on September 13, 2016.

Under Armour (UA) has a market cap of $16.2 billion. It fell 2.4% to close at $38.33 per share on September 13, 2016.

On September 13, 2016, the S&P Consumer Staples slightly outperformed the S&P 500 and the S&P Consumer Discretionary as a whole.

VF Corporation (VFC) fell 6.7% last week (August 29 to September 2), despite having no major negative news.

Fossil fell by 4.6% to close at $28.13 per share during the fifth week of August, with weekly, monthly, and YTD price movements of -4.6%, -4.8%, and -23.1%.

PVH Corporation distributes its clothing and accessories through its wholesale partners, its own retail locations, licensing channels, and e-commerce sites.

On August 12, 2016, Ralph Lauren was trading at a one-year forward earnings multiple of 20x. This is the highest PE ratio for RL in the last year.

Ralph Lauren reported a decline of 6% in global e-commerce revenues. This is unlike the general trend that has been noticed among the apparel and fashion companies.

Coach (COH) reported its fourth quarter and fiscal 2016 results on August 9, 2016. Its operating margin improved from 3.9% in 4Q15 to 10.1% in 4Q16.

Coach reported a 15% YoY increase in its top line in 4Q16. Its fiscal 2016 net sales rose 7% on a reported basis and 9% on a constant currency basis to $4.5 billion.

Coach (COH) reported its fourth quarter and fiscal 2016 results on August 9, 2016. The company reported earnings of $0.45 per share.

Though Kate Spade fumbled on its 2Q16 earnings performance, it still has strong earnings potential.

Kate Spade (KATE), which reported its 2Q16 results on August 3, 2016, reported a 13.7% YoY (year-over-year) increase in its total sales.

As a result of weaker-than-expected 2Q results, Kate Spade (KATE) lowered its full-year guidance.

Kate Spade (KATE) delivered an above-average stock market performance and gained about 21% by the end of July 2016.

After doubling its EPS (earnings per share) in fiscal 2015, Kate Spade (KATE) is predicted to report EPS growth of 56% in fiscal 2016.

Kate Spade has predicted that its top-line growth will be in the 11.0%–13.5% range in fiscal 2016, which is in line with the consensus average of 13.5%.

In 1Q16, Kate Spade reported industry-leading, direct-to-consumer comparative sales of 19%. The company also added 14 stores during the quarter.

KATE’s top line grew by 9.1% YoY (year-over-year) in fiscal 2015, as compared to a 7.7% YoY increase for Michael Kors and a 12.7% YoY decline for Coach.

Kate Spade recorded total sales of $1.3 billion in the past twelve months. Michael Kors and Coach saw sales of $4.7 billion and $4.3 billion, respectively.

Kate Spade’s primary target audience is middle- and upper-middle class consumers, particularly women, which accounted for 70% of Kate’s net sales in 2015.

KATE’s Jack Spade offers fashion products for men. The Kate Spade New York brand product line primarily sells handbags, apparel, and other accessories.

Based in New York, Kate Spade is a designer and manufacturer of apparel, women’s handbags, and accessories that operates under Kate Spade and Jack Spade.

Ralph Lauren’s (RL) fiscal 2016 revenue rose by 1% YoY (year-over-year) on a constant currency basis. It fell 2.8% YoY on a reported basis to $7.4 billion.

Fossil Group (FOSL) has a market cap of $1.4 billion. It fell by 29.1% to close at $28.44 per share on May 11, 2016.

At its current one-year forward earnings valuations multiple, HBI is operating closer to the lower end of its price-to-earnings range.

Hanesbrands (HBI) reported a 1% increase in net sales to $1.2 billion for fiscal 1Q16, which ended on April 2, 2016.

The analyst community seems to be positive about PVH and sees the potential for further price rises from its level of $94.3 as of March 24, 2016.

PVH Corp (PVH) is currently trading at one-year forward earnings multiple of 13.4x on a next-12-month earnings per share of $6.57.

The consensus analyst recommendation for Kate Spade’s (KATE) stock is “buy,” which was given by 70.0% of the Wall Street analysts surveyed.

Kate Spade (KATE) (VCR) has been very successful in penetrating the North American and international markets.

Kate Spade (KATE) released it 4Q15 earnings for the quarter ended January 31, 2016, on March 1, 2016.

Jeffrey Sherman was of the opinion that despite a rebound in equity markets, high yield investors may suffer due to volatility in the energy sector.

Fossil Group reported 4Q15 net sales of $992.5 million, a fall of 6.8% compared to net sales of $1,064.8 million in fiscal 4Q14.

Fossil Group’s stock opened 28% higher than its closing price on February 16, 2016, as it exceeded expectations. If we look at its post-rally price return over the last year, the stock has returned -47.3%.

Fossil Group (FOSL) has a market cap of $2.1 billion. FOSL rose by 28.6% to close at $44.30 per share on February 17, 2016.

Michael Kors stock rose on February 2. The comp numbers improved. Investors saw the value that the international business can add to the company.

Michael Kors pulled off a mix of organic and inorganic growth. The company’s retail sales grew by 15.7% on a constant currency basis.

Coach’s (COH) performance in North America remained pressured in the quarter, with sales declining 7% in reported terms to $731 million.

Affordable luxury pioneer Coach (COH) reported fiscal 2Q16 results on Tuesday, January 26, before the market opened.

Luxury handbag and accessory maker Coach (COH) is scheduled to declare earnings for the second quarter of fiscal 2016 on January 26.

The Fidelity Growth Company Fund (FDGRX) fell 1.0% in December 2015 from a month ago. In the one-year period, the fund is up 7.9%.

Let’s compare Fossil with its peers. The price-to-earnings ratios of Fossil, Coach, Kate Spade, and Guess? are 7.5x, 21.9x, 31.8x, and 18.2x, respectively.

Coach (COH) will declare its 4Q15 and fiscal 2015 results on August 4. Consensus Wall Street analyst estimates project sales at $974 million in the quarter.

Coach expects to realize $160 million in annual savings due to its restructuring initiatives from fiscal 2016 onward. It also expects to maintain its annual dividend of $1.35 per share.

Compared to its peers, Coach has provided higher total year-to-date returns to its shareholders. And, the stock’s up by over 9% since the company’s last earnings release on January 29, 2015.

When a country depreciates its currency, its major trading partners depreciate their own currencies. They do this to save their economies from entering into deflation.

Coach reported double-digit growth in revenues for Europe in 2Q15, due in part to growth in same-store sales and a wider distribution footprint.

To support its direct marketing initiatives, Coach has a database of 24 million households in North America and 10 million in Asia.

Coach, Inc. (COH) distributes products through wholesale and direct-to-customer channels. It runs wholesale shops-within-shops at major department stores.

Competition is fierce in all of the affordable luxury industry. And, there are many players, including KORS and KATE.

Coach has earmarked investments of ~$570 million over the next few years to improve the look of existing stores, particularly flagship stores.

Going forward, Coach will have to balance its need to rebuild its brand with the realities of a cut-throat and discount-seeking market.

Coach’s transformational plan aims to return the handbag maker to “a place of best-in-class profitability and sustainable growth.”

Coach risks becoming the victim of an ongoing west coast port dispute that is delaying the delivery of goods manufactured abroad.